Steward Health Care files for Chapter 11 bankruptcy

boston – Steward Healthcarea struggling health care company that relied on the backing of private equity investors to quickly acquire dozens of community hospitals, including facilities in Massachusetts, Texas and Florida, announced Monday. They have filed for bankruptcy.

Steward, he Millions of dollars in debtIt said it had “initiated a judicial restructuring process by filing voluntary motions for relief” under Chapter 11 of the U.S. Bankruptcy Code. The filing was filed in the Southern District of Texas.

The Dallas-based company currently has 30 hospitals in eight states, including nine in Massachusetts, where the financial crisis is raging. Concerns have been raised about patient safety.

Steward was one of the focuses of a year-and-a-half CBS News investigation that revealed how private equity investors… They embezzled hundreds of millions of dollars From community hospitals with Devastating consequences for public health. Steward hospitals across the country are dealing with a flood of unpaid bills, sometimes threatening a shortage of potentially life-saving supplies, CBS News data shows.

Last year, CBS News discovered that Steward was diverting money from hospital operations through… Texas Vista Medical Center real estate for sale in San Antonio Before the facility is completely closed.

The company’s bankruptcy filing includes 30 creditors owed a total of more than $500 million, including the U.S. government, which owes more than $32 million in damages to the federal government for overpaying insurance.

Experts tell CBS News that Steward’s debts are likely much higher, and that when the dust settles, this could be one of the largest hospital bankruptcies in U.S. history. The company said in a statement that it is confident that its owner, Medical Properties Trust, will provide sufficient financing to enable its hospitals to proceed with bankruptcy.

“The company is finalizing terms for the financing of accounts receivable owned by Medical Properties Trust for an initial financing of $75 million and up to an additional $225 million upon satisfaction of certain conditions acceptable to Medical Properties Trust,” Steward said in a statement.

Steward Health Care says no daily effects are expected

The company said the bankruptcy will allow it to “continue to provide necessary care to its patients in their communities without interruption.”

Steward and Massachusetts officials said they do not expect any disruption to daily operations.

“Steward Hospitals remain open and patients should not hesitate to seek care,” Massachusetts Health and Human Services Secretary Kate Walsh said in a statement, adding that the state is “working with Steward and any partners to ensure an orderly transition of ownership to support. ” “It protects access to care, preserves jobs and stabilizes our health care system.”

“It is safe to receive care at Steward facilities. The facilities are open. You should not pass by if you have chest pain, and if you are pregnant and about to give birth, go to the nearest hospital,” said Dr. Robert Goldstein, Massachusetts Health Commissioner. .

Despite these commitments, there is significant concern about the survival of the company’s hospitals, especially in Massachusetts. For months, health care workers have raised concerns about the impact of a potential shutdown.

“The potential loss of any of these facilities would have devastating consequences for hundreds of thousands of residents from the South Shore to southern New Hampshire,” the Massachusetts Nurses Association said in a statement. “However, Steward’s implementation of the reorganization process provides an opportunity for other stakeholders to take long-overdue action and center the voices of healthcare providers and patients,” the statement said in part.

Patients are concerned about hospitals in their area.

“We need this hospital,” said Riazuddin, who has been seeing the same doctor at St. Elizabeth’s Medical Center in Boston for 22 years. “It’s a beautiful hospital.” “The neighborhood and everyone needs it.”

“It’s necessary,” Zadani Mahdi said Monday as he headed to an appointment at St. Elizabeth’s Hospital. “Honestly, I hope they keep this hospital open. A lot of patients come here. I’ve been coming here since I was a little kid.”

Massachusetts Governor Maura Healey promised that the state would help Steward’s patients and ensure a situation like this would not happen again.

“I do not want to lose sight of the fact that the situation stems from greed, mismanagement and a lack of transparency on the part of the Steward leadership in Dallas, Texas. I have been clear about that, and I will continue to be clear about that,” Governor Healey said. “It will never happen, and we will work together to ensure the necessary steps are taken to ensure it never happens again.”

The Haley administration has launched a hotline (617-468-2189) and a site for patients who have questions.

The impact of private equity on healthcare

A spokesperson for Steward previously said that CBS News executives always put patients first, and said they “deny that other considerations are placed before this guidance.” Steward has “actively and purposefully invested” in its hospital system since its founding, including in Massachusetts, where it acquired hospitals that were “bankrupt” and “on the verge of closing,” the spokesperson said.

“Steward’s investment has taken the form of facility upgrades, equipment, technology and other significant improvements,” the spokesperson wrote.

However, Steward has become synonymous with the risks of private equity investments in healthcare. The company began buying hospitals in Massachusetts in 2010, with hundreds of millions of dollars in support from the United States. Private equity giant Cerberus,

Cerberus divested its stake in Steward in January 2021, after making a profit of $800 million in 10 years, according to Cerberus. Report from Bloomberg. Financial records show that since 2016, Steward has also sold more than $1 billion of its hospital land and buildings to Medical Properties Trust, which He was in business Purchase of hospital properties from private equity investors.

A 2021 filing with the Securities and Exchange Commission shows that Steward’s owners also paid themselves millions of dollars in dividends. Around the same time, Steward CEO Ralph de la Torre was given a 200-foot yacht. Its value is estimated at $40 million. In an email to CBS News, Steward confirmed that de la Torre owns the yacht.

“Steward Health Care has made every effort to operate successfully in an extremely challenging healthcare environment,” De La Torre said in a company statement issued at 3:30 a.m. Monday. “Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees and communities at this time.”

Senator Ed Markey of Massachusetts squeak“De la Torre and his morally bankrupt business model have failed our hospitals, our suppliers and our patients. He and his private equity allies must be held accountable. I will continue to fight to keep hospitals open and patients and caregivers safe.”